Financial Planner education


Financial planner education standards have again made the news, so i thought i’d share a little insight into the world financial planners currently inhabit. Financial planner education is just one of many areas in which financial planning has evolved dramatically. Such improvements are not general knowledge in the broader community, so this post is really just me highlighting the level of change in financial planner education and financial planner standards more broadly, over recent years.

If you aren’t really interested in financial planners or the world we walk into when we turn up at work each day then you there’s probably not much benefit in reading the rest of this post. For those who are interested, here’s my Michael’s Musings update on financial planner education and standards.

financial planner education michaels musings image by Jilbert Ebrahimi from unsplash

Financial Planner education standards have lifted – to the point where we planners may have to repeat qualifications we already have! How’s that for dedication to the cause?!

Financial Planner Education update

Financial planners live in a world of continuous change, and in this way my profession reflects that of many others – one of new and changing regulation, higher education standards, increased ongoing education standards and minimum workplace process and procedure standards. So i find it rather strange to read of yet another call for action in imposing even more of the same.

financial planner education michaels musings image by Roman Mager from unsplash

Financial Planner education standards are an ever-evolving process. The world of money does not sit still, and does not always simply fit the stories i was told in university or in earlier training programs.

So should financial planner education standards be lifted? Yep – top idea. Except that argument was had quite a long time ago, and we planners are working our way through the ‘goo’ of resultant bureaucracy to work out whether the qualifications we already have sat for, and passed, will be accepted in the new world order. And that includes full university degrees or postgrads. If you already held a qualification in an area and someone said “we no longer recognise that”, wouldn’t you be just a little bit grumpy? Well that is what is happening to a lot of financial planners, yet we planners are just trying to get on with the job and comply with whatever version of “ok” the bureaucrats come up with. So let’s just say that calling for higher education standards right now isn’t going to shine a light on you for being up-to-date on the world of money. So why call for something that is already happening?

Financial Planner standards

So in the interests of highlighting what is happening, and what has already happened, in the world of we financial planners, here is my little checklist of recent legislation or regulation changes over the last say, 5 years or so:

· Clients best interest obligations

· Advice disclosure obligations

· Advice documentation obligations

· Bias and conflicted remuneration disclosure obligations

· Minimum adviser education standards

· Legislated standard minimum superannuation account obligations

· Legislated dealer obligations to ASIC

· Legislated adviser obligations to Dealers

· Legislated monitoring, supervision, audit and reporting systems for advisers and dealers and financial institutions

· A legislated complaint system that is client focused

· A financial reimbursement system for loss caused by inappropriate advice.
The result is a robust system with clear levels of accountability and authority. Much of this legislation is relatively new, and yet to be acknowledged as ‘entrenched advice infrastructure’ but it is there and at a global level, it is recognised an advanced advice regime.

financial planner education michaels musings image by Mike Wilson from unsplash

The infrastructure in place to ensure a strong and reliable financial planning world is substantial, and continuously being added to. Even if i sound grump in this post, i am very much in favour of the vast bulk of the changes brought to the financial planning world.

Financial Planner Change

The process of implementing wholesale change is a difficult one, and even though the advice environment has been shaken and stirred vigorously in an effort to make it the best of the best, there have been outcomes that were not intended. The good news is that these less desirable outcomes are likely to fade over time, and some element of “reasonableness” will eventually dominate.

After decades of watching regulators and institutions and professions trying to balance the needs of clients and service providers, I feel quite comfortable that sense will eventually prevail. In the meanwhile, here is a personal interpretation of some shortfalls between what was intended to happen, and what has actually happened.

· The high level of regulation has resulted in a virtual monopolistic interpretation of what constitutes acceptable advice. This has in turn, has strangled innovation and efficiency. In other words, planners are being told not just what financial planning is and should be – but how it should be done as well. Again, this is a transitory stage in any time of great change but it has certainly impacted advisers and therefore their clients, in negative ways.

· The enormous lift in compliance process and requirements has increased costs to the point where less adviser time is available to deal with client communication and contact. This has in turn reduced the incentive for advisers to offer their advice services to a wider section of the community.

· An increased paperwork, process and compliance regime has forced such focus on immediate costs and efficiency that it has resulted in true personal advice becoming too costly for the average adviser to provide to the average person. This in turn has reduced the ability of advisers to offer a wider service offering, which in turn has forced people to look for ‘standard’ advice providers, such as large banks, financial institutions and superannuation funds – all of which are heavily biased in their approach and their service and their product offerings.

The future is bright!

financial planner education the future is bright image by Sam Schooler from unsplash

Financial Planner education and standards ARE lifting – so i am confident that your interactions with the world of financial planners will be a positive one. Even if you don’t come to me!

At some stage, there has to be a limit to the imposition of legislation and regulation on the advice process.

You can increase education standards, impose minimum documentation, process, monitoring and compliance standards as well as mandate financial, civil and criminal penalties for breaches of any component of that advice regime. And you can set up a system of remediation for inappropriate conduct and compensate clients for inappropriate advice. But all of those things have already been done.

What you cannot do, is to regulate to remove criminals, negligent, reckless or inept advisers. That is illogical. All you can do is to establish conditions that you hope will be least conducive to helping those crooks from flourishing.

The next step is to improve communication and general community knowledge on these processes and the advice ecosystem that is on offer. Ensure financial education and literacy is part of the school education standards, and empower advisers to provide low-cost, general advice as well as personal financial advice.

This will be the best way of ensuring less people make ill-informed or ill-advised financial decisions.

As usual, any thoughts or comments or critiques are welcome.





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